Microsoft exits mobile phone business almost completely, but leaves a lifeline

Finnish employees of Microsoft Mobile Phones business were invited to the Microsoft Mobile Headquarters in Finland for an internal event. It's expected that there will be news on the faltering smartphone business with the Lumia line of products.

The business has not been doing well since Microsoft bought it from Nokia at the price of 5.5 Billion Euro. Just this week Gartner informed that the global marketshare of the phones had dropped to less then a percent of the smartphone market.

Sources stated that Microsoft would exit the business completely, but instead they Microsoft announced that while they are cutting down significantly. They kept the door open to the business by leaving a handful of design and development staff to the Finnish HQ, while laying of some 1500 people.

It's not the first time there has been bad news for ex-Nokians in Finland since the acquisition by Microsoft as in 2015 the company shedded 2300 jobs in Salo, Tampere and Espoo. Already in 2014 they shut down the Oulu unit and let go around a thousand employees.

Last year the Salo research facility was closed completely. This was where Nokia sprang in the early 1990's to become the largest mobile phone manufacturer for a number of years.

After selling the mobile phone business to Microsoft, Nokia still continues as an independent company focusing on mobile networks and is in fact returning to the smartphone market by licensing it's brand: Nokia will launch new smartphones in 2016

In an internal announcement of Microsoft Mobile Restructuring, Terry Myerson wrote to the staff:

Team,

Last week we announced the sale of our feature phone business. Today I want to share that we are taking the additional step of streamlining our smartphone hardware business, and we anticipate this will impact up to 1,850 jobs worldwide, up to 1,350 of which are in Finland. These changes are incredibly difficult because of the impact on good people who have contributed greatly to Microsoft. Speaking on behalf of Satya and the entire Senior Leadership Team, we are committed to help each individual impacted with our support, resources, and respect.

For context, Windows 10 recently crossed 300 million monthly active devices, our Surface and Xbox customer satisfaction is at record levels, and HoloLens enthusiasts are developing incredible new experiences. Yet our phone success has been limited to companies valuing our commitment to security, manageability, and Continuum, and with consumers who value the same. Thus, we need to be more focused in our phone hardware efforts.

With this focus, our Windows strategy remains unchanged:

1. Universal apps. We have built an amazing platform, with a rich innovation roadmap ahead. Expanding the devices we reach and the capabilities for developers is our top priority.

2. We always take care of our customers, Windows phones are no exception. We will continue to update and support our current Lumia and OEM partner phones, and develop great new devices.

3. We remain steadfast in our pursuit of innovation across our Windows devices and our services to create new and delightful experiences. Our best work for customers comes from our device, platform, and service combination.

At the same time, our company will be pragmatic and embrace other mobile platforms with our productivity services, device management services, and development tools — regardless of a person’s phone choice, we want everyone to be able to experience what Microsoft has to offer them.

With that all said… I used the words “be more focused” above. This in fact describes what we are doing (we’re scaling back, but we’re not out!), but at the same time I don’t love it because it lacks the emotional impact of this decision. When I look back on our journey in mobility, we’ve done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact. At the same time, Ars Technica recently published a long story documenting our journey to create the universal platform for our developers. The story shows the real challenges we faced, and the grit required to get it done. The story closes with this:

“And as long as it has taken the company, Microsoft has still arguably achieved something that its competitors have not… It took more than two decades to get there, but Microsoft still somehow got there first.”

For me, that’s what focus can deliver for us, and now we get to build on that foundation to build amazing products.